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Securing The Home With An Earnest Money Deposit
After you’ve evaluated the home with your agent, it is time to prepare an offer that will get accepted. You might still be amazed and excited about the things you’re already planning with your potential new home, but there is still another thing that you have to face, which is understanding earnest money deposits.
As you prepare an offer, your agent should ask questions to the other party that would naturally lead to a better deal. It is essential to know that earnest money deposits are also crucial in accepting your offer by the seller and their listing agent.
Today, we’ll talk about the importance of earnest money deposits and what your agent should do to get your offer accepted to bring you the home you want.
Agent To Agent Conversation
When you’ve chosen a home and finished evaluating it, your agent should naturally talk to the seller’s listing agent to formulate a better deal for both parties. Your agent should ask about the following:
What’s the motivation of the seller?
What’s the lowest amount of money the seller will take?
What is essential to the seller?
After knowing the answers to these and formulating an offer to the seller, their listing agent will accept, reject, or counteroffer it. Either way, when you’re putting the offer together with your agent, you should consider putting together an earnest money deposit.
What Is An Earnest Money Deposit
An earnest money deposit is a sum a buyer provides to demonstrate their commitment to purchasing a property. It is typically held in an escrow account or a third party until the sale's closing.
A common misconception about earnest money deposits is that they are non-refundable under all circumstances. While earnest money deposits demonstrate a buyer's commitment to the purchase, there are situations where the deposit may be refunded, such as if the seller fails to meet certain contractual obligations or if specific contingencies outlined in the purchase agreement are not satisfied.
Why Bother Putting Together A Deposit
Putting together an earnest deposit shows your commitment and good faith to the seller. It assures the seller that the buyer is financially capable and committed to completing the transaction. Additionally, earnest money deposits can help secure the property for the buyer by preventing the seller from accepting other offers during the negotiation process.
On the other hand, when you don’t do things required in the contract terms, the third party will potentially distribute the money deposit back to the seller.
How Much Money To Deposit
Now, the real question here is how much you should deposit to ensure everything goes smoothly. The answer is as much as possible. It is because when you go to closing in the future, the money will get distributed back to you as part of your down payment or as part of your closing costs.
So, there will be a transactional cost, which you’ll have to pay anyway, or it will come back to you. The bottom line is that everything will be fine as long as you do what you say you will do.
If you want to know more, feel free to reach out to me at (703) 562-1788 or Dan@greetingsvirginia.com. I’d be more than happy to show you around!
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